Kaifu Lee To Launch Innovation Works (创新工场) Incubator

Google China President Kaifu Lee resigned from Google on Saturday and rumors immediately began circulating about the reasons why and his next steps.  In Kaifu Lee’s latest blog post entitled “Goodbye, Google,” (zh)  he ends his post with a quote from Steve Jobs exhorting people to “follow their hearts and intuition.”  It increasing appears his heart is with young Chinese entrepreneurs and fostering innovation.  PEHub’s Alastair Goldfisher highlighted some tantalizing rumors about an “Idealab” type incubator but didn’t go further because the news was embargoed until Sunday.

UPDATE 9/7: all the details of this story have largely been confirmed at this point (see peHub, VentureBeat).  The $115 fund is led by WI Harper and includes wealthy individuals like Steve Chen (co-founder of YouTube), Terry Gou (chairman of Foxconn), Liu Chuanzhi (chairman of Legend Group) and Yu Minhong (chairman of New Oriental)  – (source peHub)

This post also contains some interesting commentary by Chinese tech blogger keso, who met with Kaifu Lee days before the announcement.  See his comments as an UPDATE below, and also a link to a ChinaHush translation of his post.

With prominent (and often humorous) Chinese blogger hecaitou as a source (these tweets: 1,2,3,4), we believe that the name of this new incubator is Innovation Works (创新工场), with an incomplete website launched (Chinese version, English version).  Here is a screenshot of the new site:

Innovation Works

Further confirmation of the linkage between Innovation Works and Kaifu Lee can be found on this Sina article about Kaifu Lee’s upcoming autobiography.  The description at the bottom states:  “Founded in 2009, the Innovation Workshop is a comprehensive business platform designed to nurture a new generation of innovators and high-tech enterprises.” (“2009年创立创新工场，一个全方位的创业平台，旨在培育创新人才和新一代高科技企业”).

Photo courtesy Sina

The site is still pretty minimal but highlights a few interesting aspects:

The incubator appears to be hiring staff.  There are recruiting descriptions for the following jobs:

• Software Engineer
• Product Manager
• User Experience Designer
• Software Engineer Intern

See this page (English version) for more information.  This is a more aggressive approach at new venture incubation than most Western venture funds take.  Most venture capital firms provide capital, and perhaps space, but almost never hire staff on behalf of their portfolio companies.  The approach Lee is taking appears to be a hybrid operating company and venture fund.

The incubator already appears to have some physical space near Qinghua University in Beijing, where many other high tech companies are located, including Google.

查看大图

I’ll be sifting through the news (see Baidu search results, Google search results) to see what else I can find.  Please drop a comment if you have any further news.  More to come.  I’ve emailed the Innovation Works press contact to see if I can get some information.

UPDATE: Hecaitou also pointed me to this forum post that he found where a Chinese netizen was sleuthing around the Domain registration records and found that the domains were established September 1.  The Chinese netizen human flesh search engine is at work!

Dear Innovation Works people, I am but a humble China-related English-language niche blogger, but I have met Kaifu before on the China 2.0 blogger tour and enjoyed his presentation greatly.  Can I request an interview?  Hope to learn more about your new venture Kaifu!

Kaifu Lee at China 2.0 Tour

UPDATE: 8:00 am BJ time Sunday 9/5

I asked IT blogger Keso (blog, Twitter) to react to my post.  Yesterday, he wrote a post entitled “Ramblings: Google China during the era of Kai-Fu Lee” (zh) that captures the difficulty of providing leadership of a high-profile technology company in China that also requires “shuttle diplomacy” with its American headquarters.  Four years is a long time to carry the weight of leadership, and is a relatively long tenure for multinational companies in China who experience a tremendous amount of management churn.   In summary, Keso states that the biggest accomplishment of the last four years is that Google has become a company that cannot be easily defeated by its competitors.

I followed up with Keso and asked him for feedback (and ideally confirmation) on this post.  I can’t translate the answers and we’ll do so after Min, Ying or Kai wake up and get around to it.  For now, I’ll just quote the answers in Chinese:

尽管我还不知道开复的新公司是否就叫“创新工场”，

不过看上去跟他要做的事情非常吻合。

在北京时间前天早晨和开复的通话中，他向我描述了他的新公司，我问他，是不是类似IdeaLab那样的一家公司。他回答说，差不多，但不会像IdeaLab那么独裁，所有创新的想法全部来自Bill Gross一个人。开复的新公司将鼓励年轻人通过技术创新来实现商业价值，也就是说，在他的平台上，未来将会孵化出一批基于技术创新的企业。钱不是问题，开复已经基本解决了资金来源的问题。另外，开复的新公司还会有一批世界知名人士加盟，作为青年创业者的导师，其中包括YouTube的创始人Steve Chen。

我所知道的大约就是这些。

Although I don’t know if Kaifu’s new company named “Innovation Works” yet, but it looks like matching what he wants to do.

In the phone call with Kaifu two days’ ago in the morning, Kaifu described me his new company. I asked him if the concept of his new company is very similar to IdeaLab.  He answered “pretty much, but much less ‘dictatorial’ than IdeaLab which almost all innovation ideas are from Bill Gross himself. Kaifu’s new venture is going to encourage young  people to realize their value in business through innovation. That is to say, his platform will incubate some innovation-based entrepreneurship. Funding is not an issue and Kaifu has basically settled it. Besides, he’s also invited  a lists of world-known people to be the advisers of young entrepreneurs, including YouTube’s founder Steve Chen. – Translated by Min

对了，我和开复的那次长谈，是在2008年初，

当时谷歌中国在流量方面花了不少钱，包括收购265.com，投资迅雷，与天涯合作等。此外，谷歌中国还开发了谷歌导航、谷歌热榜等产品。我当时对这些做法都表示了质疑，我认为谷歌中国没有开发出任何一种超越现有市场的产品，它做的所有的事情，都是在做一个别人已经做过，并且做得不错的产品。使用Hao123.com的用户，没有理由改用265.com，用搜狗输入法的用户，也没有理由改用谷歌输入法，因为后者并不比前者更好。开复对此都做了解释，比如谷歌中国的工程师比较年轻，创新经验不足，谷歌中国的品牌在用户当中的认知不够，必须设法让用户能够接触到谷歌的产品，等等。开复还说，他正在推动谷歌中国的20%自由时间创新文化。

不过，前天早晨，开复对Google的20%自由时间也已经有了一些疑问，他说，20%自由时间创新，基本上都是自发的、缺乏规划的产品，其中大多数根本没法拿到市场上去。他说这种方式并不非常可。

Right, the long conversation with Kaifu was in early 2008.

Back then Google has spent a lot of money on traffic, including buying 265.com, investing in Xunlei, partnering with Tianya, etc.  In addition, Google China has also developed products like Google Navigation and Google  Hotlist. I was very suspected on all these actions, I didn’t think Google had developed a single product that are superior than those in the market. The products Google developed were following what had been pretty well developed in China by other players.  (For example), users of Hao123.com has no reason to switch to 265.com; users of Sougu Chinese typewriting application has no reason to switch to Google’s. Because the later is not better than the former. Kaifu responded and explained that engineers in Google China are very young and less experienced in innovation; Google China brand is not widely recognized in China so they had to develop products that would enable users interaction, etc.  Kaifu also said he was introducing the “20% free innovation time” culture in China.

But, two days’ ago when we talked, Kaifu was doubt about the Google “20% free innovation time” idea. He said in the 20% free hours, most of the engineerers are developing products without much strategic planning so that most of these products are not marketable. So this is very undesirable. – Translated by Min

Keso’s comments are worthy of its own post!  I’ll wait for Min or Kai to translate this comment.   It hints at the difficulty of truly building innovative new products for China when you are focused on the biggest, most strategic battlegrounds with powerful competitors:  search, mobile, etc.   I shared with Keso that I think the “innovator’s dilemma” that Google faces is not just in China but globally.  Thank you Keso!

UPDATE 9/6 12:00 noon BJ time

I just read Gang Lu’s post at Mobinode that also highlights a tweet from Kaifu Lee that says that “the site for my new company is now live, but the information on it is not accurate. More to come after the official press release”.

UPDATE 9/6 1:00 pm BJ time

This morning, Kaifu Lee posted on his blog a new post entitled “Let’s clarify some media misperceptions.”    Lee is an active blogger and Twitter user and is an excellent example of an executive engaging with audiences using social media.  Here’s a quick summary of his post:

• First, government condemnation of Google for allowing porn was not a factor in his departure.  The issue had already been resolved to the satisfaction of the Chinese government, and Google HQ was similarly pleased with the outcome.
• Second, some have criticized Lee as not having entrepreneurial experience and having too much money to work hard.  He highlights his startup experience launching Google China and Microsoft Research China.
• Finally, he debunks a number of other misperceptions, such as the “IdeaLab” rumor, or that Google is considering withdrawing from China, or because Mountain View HQ did not sufficiently delegate power.  Lee claims that Google is by far the most decentralized of all multinational companies.

In summary, Lee is successfully using his online platform to engage with Netizens in a conversation, and continue to win their hearts as he has so successfully done in the past.

UPDATE 9/6 8:05 pm BJ time

Reuters’ correspondent George Chen also reports that, according to  Hong Kong’s South China Morning Post (who cites an unnamed source familiar with Lee’s plans), the fund will launch with about RMB 800 million (about USD $117.1 million).  He also reports on comments Lee made in response to questions from China Computer World:

“I firmly agreed with the head offices of Google that we needed great patience to make the best products (in China) from the very beginning,” the influential industry media China Computer World (CCW) reported on its Chinese-language website, citing a letter from Taiwan-born Lee. (www.ccw.com.cn)

“(We) should not attempt to hasten the pace or have a speculative attitude on the hope that we can make a quick success by offering products that can immediately earn money,” CCW reported, quoting Lee’s letter in response to his resignation from Google.

UPDATE 9/7 10:00 pm BJ time

ChinaHush just translated Keso’s post reflecting on the Kaifu Lee era of Google.  Go read it!

Keso points out that 4 years ago, many people felt that Google didn’t have a chance at staying in the market:

4 years ago, almost everyone in the industry were pessimistic, Google China may find difficult to survive in China. Li Yanhong (李彦宏) also said, 5 years later, the relationship between Google and Baidu will be Baidu thriving alone, from the point view of market shares, we will probably not going to see Google anymore. There are still more than a year left on the time given by Li, it looks like Google China not only can survive, but should live in a not so bad life.

Also, Keso hints at the difficulty of operating as a multinational company in China:

Another common trouble of a multinational corporation is the communication barrier between the respective headquarters. In the most failure cases, China’s regional headquarters often blame the headquarter being not supporting, not delegating power to the lower levels, rigid and slow. Google CEO Eric Schmidt goes to China almost every year, I think it represents the Google headquarter is behind Kai-fu Lee. In order to gain support and understanding of Google headquarter, Kai-fu Lee constantly shuttling between China and U.S., in addition to persuade Google executives, he also very patiently analyzed and explained Google China’s strategy to the Engineers. This kind of communication gained more understanding, reduced friction, improved efficiency and played the role of “lubricant” on Google China’s daily work. Considering Google is a company with such distinct characteristics and the Sino-US cultural, market and policy environment differences, Kai-fu Lee’s communication was very valuable.

In his life, Kaifu Lee has personal experience with research, and with leading researchers.  But as President of Google China, he was first and foremost an ambassador, a politician, and a communicator.  Perhaps in his new role, he will have a chance to be more directly involved in fostering innovation.

Thanks ChinaHush for the translation!